Sunday, March 10, 2013

Dredging Corporation of India, a Government of India undertaking, has come out with Rs 500 crore public issue of tax free secured redeemable non-convertible bonds. The company provides integrated dredging services to India's major ports, non-major ports, shipyards and Indian Navy in the form of maintenance dredging, capital dredging, reclamation, hydro-graphic surveys and beach nourishment. For those individuals who are in the highest tax bracket, this is a good source of tax free secured interest income.

Opening and Closing dates:

The issue shall open on 7 March, 2013 and shall close on 15 March, 2013.

Face Value:

The face value is Rs 1000 per bond and the minimum application for subscription in retail segment is Rs 5,000 with maximum at Rs 10 Lakhs in increment of Rs 1000.

Available options:

Interest Rate %

Period

Retail

HNI / Corporate

10 yr

7.47%

6.97%

Those investing up-to Rs 10 lakhs are retail investors and above that are High Net-worth Investors (HNIs) for the purpose of this issue. These bonds carry a step-down clause - the coupon gets reduced by 50 basis points for retail investors once the bonds get listed or the ownership of bonds changes hands. Interest would be paid annually for all categories.Brickwork has rated AA+ and CARE AA to the bond issue indicating safe investment. These bonds would be listed and tradable on NSE and BSE. No tax would be deducted at source on income and the allotments would be on first come first serve basis.

The issue can be subscribed in DMAT as well as physical form.

National Highways Authority of India, Housing and Urban Development Corp, National Housing Bank, Indian Railways Finance Corp, IIFCL, Ennore Port, Jawaharlal Nehru Port and Dredging Corporation are among companies permitted by the government to sell tax-free bonds under Section 10 (15).